The Definition of Insanity

Definition of insanityIt happens about this time every year. Companies go through an annual planning process. People painstakingly put together their expense budgets. Cost of living and general inflation is factored in. All the numbers get pulled together and the expenses are too high. So, a note goes out that instructs people to cut expenses. Not do things differently. Just cut expenses. In some cases, a reorg is announced and people shuffle seats, sometimes accompanied by headcount reductions. In either of these cases, the people are expected to do the same thing with less. It happens every year. That’s the definition of insanity – doing things the same way and expecting a different result.

The world continues to evolve. To stay effective and competitive, the business needs to evolve as well. Rather than going through and looking at the expenses and revenues in isolation, a better approach is to look at how the business can operate most effectively. This includes how technology is used, whether processes are efficient and effective, and whether the needs of the customer are being met. The financial results are a symptom of how well the organization is working. How do you make sure you aren’t in the insanity trap?

Posted in Financial Management, Leadership, Strategy.

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